and Market Demographics CHINA RETAIL MARKET: CONSUMERS TODAY AND - PowerPoint PPT Presentation

ANALYSIS: Pecan Nut Export to China and Market Demographics

CHINA RETAIL MARKET: CONSUMERS TODAY AND THE FUTURE INSHELL PECAN INSHELL PECAN IMPORTED BY CHINA EXPORTED TO CHINA HOW TO KEEP EXPORT AND PRICES STRONG

CHINA RETAIL MARKETS CONSUMERS OF TODAY …AND TOMORROW … the number keeps rising in China China is the largest international market for Tree Nuts outside the U.S.

China Market Demographics  1.4 Billion people in China  China will gain 182 Million consumers in the next 10 years  China’s middle class is now the size of the entire U.S. popu  By 2020, 81% growth in consumption is projected  From “CHASING WEALTH” to “CHASING HEALTH”= EAT RIGHT

Positive Numbers for 2017 China Exports  Shipments to China accounted for 51% of all US pecan exports compared to 44% last year. Overall exports to China are up 27%.  CHINA PECAN IMPORT DUTY REDUCED FROM 10% TO 7% IN DECEMBER 2017. **PECAN IMPORT DUTY FROM AUSTRALIA WILL BE 0% IN 2019!

E-Commerce Penetration Growing Rapidly E-Commerce nut purchases are growing rapidly. Traditional retail market is declining . Top 10 Top 10 snack E-commerce snack Brand Brand in 2016 based on sales volume and value on Tmall, Oct1 – Dec22,2016 Three Squirrels 三只松鼠松 Three Squirrels 三只松鼠 1 New trends in nuts for China Be & Cheery 百草味 Be & Cheery 百草味 2 Bestore 良品 铺子 Bestore 良品 铺子 3 o Less flavored QiaQia 恰恰 Tong Nian Ji 童年 记 4 Xin Bian Jie 新 边界 HuaWeiHeng 华味亨 5 o Minimal processing Aming 阿明 Xin Nong Ge 新 农哥 6 Lyfen 来伊份 Silly Funny Bear 憨豆熊 7 Kswfood 口水娃 Lao Jie Kou 老街口 o Kernel market is growing very fast 8 Tenwow 天喔 Lou Lan Mi Yu 楼 兰蜜语 9 HengKang 恒康 Kou Kou Fu 口口福 10

E-Commerce Penetration Growing Rapidly Public data shows that China’s nuts business value is 29 billion in 2017, and will reach 50 billion in 2020. China’s consumption of tree nuts increased 17% from January 2017 to December 2017. However, consumption of Pecans & Macadamias down slightly September through December compared to last year . ( Resources: sycm)

Nuts Sales Ranking in Annual Revenue 2017 (E-Commerce) 6500 7000 MILLION 5500 6000 5000 • Went from a single retail to the Largest Online Agri-business in 6 years. 4000 2600 • According to the latest sales report, their sales reached 1.03 Billion in 2017. 3000 2000 1100 326 1000 30 0 2012 2013 2014 2015 2016 2017 Annual Revenue Linear (Annual Revenue) Annual Sale of Pecans (NIS) 12000 9000 9000 10000 8000 5500 6000 3800 4000 1200 2000 250 0 2012 2013 2014 2015 2016 2017 Annual Revenue Linear (Annual Revenue) Top Ten China Nuts consumption Markets Jan – Dec 2017

INSHELL PECAN IMPORTED BY CHINA U.S. | SOUTH AFRICA | MEXICO

UNDERSTANDING OUR COMPETITORS • South Africa, Mexico • Other Tree Nuts

Inshell Pecan exported to China are mainly from the following areas: 2016 WORLD INSHELL PECAN EXPORT TO CHINA (MT) 49,943 Sonora, Mexico 50,000 31,305 40,000 11,000 Georgia, USA 30,000 6,138 1,500 20,000 10,000 South Africa 0 US MEXICO SOUTH AFRICA OTHERS TOTAL (ARGENTINA PERU, AUSTRALIA ) U.S. INSHELL PECAN EXPORTS TO MEXICO INSHELL PECAN EXPORTS TO SOUTH AFRICA INSHELL PECAN EXPORTS TO CHINA (MT) CHINA (MT) CHINA (MT) 6,604 44,522 5,579 50,000 12,500 38,657 4,092 40,000 8,000 31,305 9,288 30,402 8,618 15,000 3,337 3,316 3,141 7,123 25,404 6,780 6,000 6,138 30,000 10,000 4,000 3,415 20,000 2,000 5,000 10,000 - - - 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2017 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 (est) **The export number does not include the quantity that was shipped through US port. Source: Agriculture information Service Mexico,SAGARPA COMENUEZ, Productora, SIAP, NPSA, Carter Pecan, South Africa Pecan Processors Association

U.S. INSHELL AND PECAN KERNEL EXPORTS TO CHINA (MT) U.S. INSHELL PECAN EXPORTS TO CHINA U.S. PECAN CROP PRODUCTION (Included: China, Hong Kong, Vietnam ) 166,468 Approximately 26% of the 200,000 44,522 50,000 120,805 119,839 119,159 115,344 38,657 U.S. Pecan production is 150,000 40,000 31,305 30,402 shipped to China. 25,404 30,000 100,000 20,000 50,000 10,000 - - 2012/13 2013/14 2014/15 2015/16 2016/17 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 USDA crop year Sep. 1 to August. 30 Approximately 75% of PECAN KERNEL EXPORTS TO CHINA the U.S. Inshell Pecan U.S. INSHELL PECAN SHIPMENTS TO CHINA (Included: China, Hong Kong, Vietnam ) SEPTEMBER TO DECEMBER (MT) exported to China is from 2,264 2,500 30,775 Georgia. 35,000 23,952 23,502 2,000 30,000 17,915 25,000 16,314 15,729 1,500 20,000 874 15,000 1,000 613 10,000 352 330 5,000 500 - - 2012 2013 2014 2015 2016 2017 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 Source: NPSA SEP OCT NOV DEC

SOUTH AFRICA 70,000 SOUTH AFRICA PLANTED HECTARES 60,000 50,000 40,000 29,000 70% of South Africa pecan production is in the 30,000 Northern Cape Province 20,000 10,000 - Approximately 29,000 hectares planted (currently) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (est) (est) (est) (est) (est) SOUTH AFRICA PECAN PRODUCTION (MT) Approximately 28% hectares are currently in 32,908 production 40,000 30,000 16,500 Approximately 75% of inshell pecan nuts are 20,000 10,080 exported to China. 10,000 - Main Cultivars : Wichita, Choctaw, Western, 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (est) (est.) (est.) (est.) (est.) Pawnee. SOUTH AFRICA INSHELL PECAN EXPORT TO CHINA (MT) 36% of the crop is 45-55 nuts per pound and 40% is South Africa exports 75% of inshell pecan to China 55-65 nuts per pound 23,036 30,000 12,500 South Africa crop harvest time is favorable for 6,138 20,000 marketing to China 10,000 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (est) (est) (est) (est) (est) Source: INC, Golden Peanut & Tree Nut, , INC online data, South Africa Pecan Processors Association

MEXICO PLANTED HECTARES MEXICO 120,000 100,000 80,000 60,000 40,000 Estimated 2016 crop production was 142,140 MT in Mexico. 20,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Approximately 11,000 MT was export to China. (In 2016: 6,604 MT was shipped from Mexico ports. ) MEXICO INSHELL PECAN EXPORTS TO CHINA (MT) Approximately 65% of the inshell pecan exported to China is 6,604 5,579 from Sonora. 8,000 4,092 6,000 3,337 3,316 3,141 Sonora main cultivars: Wichita 70% and Western 20%; 4,000 approximately 60% of crop is 45-55 count per pound. 2,000 Sonora harvest in September, right on time for the Chinese - 2011 2012 2013 2014 2015 2016 New Year. **The export number does not include the quantity that was shipped through US port. MEXICO PECAN PRODUCTION (MT) 161,389 SONORA, MEXICO PRODUCTION IN (MT) 142,140 200,000 25,000 150,000 17,500 25,000 20,000 100,000 15,000 50,000 10,000 5,000 0 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (est.) (est.) (est.) (est.) (est.) 2015 2016 2017 2018 2019 2020 2021 (est.) (est.) (est.) (est.) (est.) Source: Agriculture information Service Mexico, SAGARPA COMENUEZ, Productora, SIAP

CHINA IS PLANTING PECAN TREES - FUTURE ESTIMATED PRODUCTION Production until Growing 31,533 Hectares of pecan has been planted in China Product 2016 Hectare 2016 ( MT) Area Source from 2011 to 2016. Heilongjiang, Jilin, Liaoning, Inner-Mongolia, 450,000 Yunnam Pine Nuts square 黑龍江，吉林，了宁，内蒙古，云 CCCFNA, Liaoning Forestry 2016 estimated production was 110 MT. 松子 南 kilometers 12,000 (kernel) Research Institute 21 provinces, capital city Walnuts 核桃 autonomous regions 全国 21 个省， 200,000 900,000 (in shell) CCCFNA 自治区 Heilongjiang, Jilin, Liaoning, The Fruit and Tree Nut Research Hazel Nuts 榛子 Xinjiang 黑龍江，吉林， 辽 宁， 新 2021 estimated production 39,213 MT.(**) 160,000 40,000 (in shell) Institute of Liaoning Province 疆 Yunnan, Guangxi, Macadamia 夏威夷 Guangdong,Sichuan ， Yunnan Macadamia Association, 100,000 8,000( in shell) 果 Guizhou Guangxi Fuxu Macadamia Farms Main Cultivars: Pawnee, Wichita and Western Schley 云南，广西， 广 东 ，四川， 贵 州 Yunnan, Anhui, Zhejiang, Jiangsu, Liu Guangqin, Researcher and iangxi, Hunan, Henan 云南，安徽 Pecan Nut 碧根果 31,533 110 (in shell) Professor of Jiangsu Academy of 江 苏 ，浙江，江西，河南， Agricultural Sciences 湖南广 西，山 东 Kashi Regional Forestry Knowledge Pistachio 开心果 Xinjiang 新疆 3,000 30 (in shell) Promotion Center of Xinjiang Horticultural College of Xinjiang Almond 巴旦木 Xinjiang, Shanxi 新疆，山西 20,000 50,000 (in shell) Agricultural University Horticultural College of Agricultural University of Cashew Nut 腰果 Hainan, Yunnan 海南， 云南 700 420( in shell) Southern China PROVINCES WHERE PECAN HAS BEEN PLANTED AS OF 2016 (HECTARES) 40,000 30,000 20,000 10,000 - Sources: Liu Guangqin , Jiangsu Academy of Agriculture Sciences, Chinese Academy of Forestry, Research Institute of Subtropical Forestry, Nature’s Finest Foods.